On January 25, 2022, House Democratic leaders released new text, a section-by-section review, and a shorter fact sheet for the America COMPETES Act of 2022 (H.R. 4521), which includes funding to address computer chip shortages and other supply chain issues while bolstering U.S. competitiveness against China. The mammoth new bill incorporates legislation from 11 House committees touching on everything from manufacturing to education to immigration. The bill enjoys support from Senate Democratic leadership as well as the Biden White House.
The House will attempt to pass the America COMPETES Act as early as next week. From there, Democratic leaders will negotiate to merge the bill with the Senate-passed U.S. Innovation and Competition Act (USICA, S. 1260, formerly known as the Endless Frontiers Act) from Senate Majority Leader Chuck Schumer (D-NY). The Senate passed USICA in a bipartisan 68-32 vote in June 2021. Merging the two versions of the bill will require even more changes to the underlying bill, then up-or-down votes in both chambers on the final draft. However, despite bipartisan support for the bill, it could still face a rocky road as leaders debate the details and implications for the U.S.’s global standing.
First, the America COMPETES Act tackles the national semiconductor shortage, which has slowed production of electronics and technology of all types. Earlier this week the U.S. Commerce Department reported that U.S. companies only have an average of about 5 days’ worth of computer chips on hand. Competition with China for critical minerals as well as concerns that the Chinese government could spy or sabotage through Chinese-made computer chips has contributed to the global crisis. The America COMPETES Act includes $52 billion to fund provisions outlined in last year’s CHIPS Act (included in the FY 2021 National Defense Authorization Act), which allows the U.S. Department of Commerce to invest up to $3 billion per project in private-sector semiconductor manufacturing, research, and development. The bill also spends $500 million to create a new Commerce Department office to monitor and counter supply chain problems, including through liaisons with the private sector.
On the trade side, the bill includes H.R. 6412, the Import Security Fairness Act from House Ways and Means Trade Chairman Earl Blumenauer (D-OR) to end the de minimis exception for low-value packages arriving from China and other non-market economy nations on the U.S. Trade Representative’s (USTR) intellectual property rights watchlist. Blumenauer and allies say the bill will crack down on Chinese companies who split up shipments to skirt U.S. duties and block counterfeit goods. The bill also includes reauthorizations of the Generalized System of Preferences (GSP) and Miscellaneous Tariff Bill (MTB), which ease trade and cut tariffs with U.S.-friendly nations. The bill also includes the text of the Trade Adjustment Assistance Modernization Act of 2021, which boosts funding and extends for seven years programs retraining workers and relocating adversely impacted by trade. Elsewhere, Sens. Bob Casey (D-PA) and John Cornyn (R-TX) also touted the new bill’s inclusion of the National Critical Capabilities Defense Act (S.1854), which the U.S. Chamber of Commerce notably opposed last year. This bill would create a multi-agency National Critical Capabilities Committee (NCCC) to review and block certain U.S. production offshoring, development, or manufacturing of critical national capabilities in foreign adversary nations. Finally, the bill includes H.R. 6121, the elimination Global Market Distortions to Protect American Jobs Act from Rep. Terri Sewell (D-AL), which was notably not included in the Senate-approved draft. This bill would strengthen the Department of Commerce’s enforcement capabilities against foreign “dumping” of underpriced goods in the U.S. market.
The bill also addresses human rights abuses in China, building on the Uyghur Human Rights Policy Act of 2020 to impose sanctions based on “systematic rape, coercive abortion, forced sterilization, or involuntary contraceptive implantation policies and practices in Xinjiang” according to the bill summary. Elsewhere the bill seeks better enforcement against forced labor in food supply chain, particularly dealing with seafood from China. The bill sets aside $500 million to counter China-originating disinformation campaigns. Finally, the bill reaffirms the U.S.’s friendly stance toward Taiwan.
The bill also addresses China’s role in the telecommunications industry, providing $1.5 billion for open-access software-based Open Radio Access Network (Open RAN) network development and further development of the U.S.’s mobile connectivity. These provisions are designed to prevent U.S. consumers and infrastructures from relying on Chinese-made technology for internet and mobile communications.
The House Judiciary section of the new bill touches further on intellectual property matters by holding e-commerce platforms responsible for sales of dangerous counterfeit products unless platforms follow recommended practices. Elsewhere but apparently unrelated to China, the bill increases filing fees for larger and complex corporate mergers to account for antitrust inspection costs.
The bill’s education and labor section includes the text of the National Apprenticeship Act (H.R. 447), which passed the House as a standalone bill in 2021. This bill would overhaul the national apprenticeship system and surge federal funding for registered apprenticeship programs each year for five years to a high of $800 million annually by FY 2026. The bill would also permanently replace Trump Administration regulations on apprenticeships which downplayed the role of labor unions. The updated bill also includes language touching on China’s growing role in the U.S. higher education system, adding new transparency rules for China-backed “Confucius Institutes” requiring disclosures of foreign gifts and contracts at U.S. colleges.
On financial matters, the House Financial Services Committee added provisions to ensure that Chinese firms listed on U.S. stock exchanges comply with public inspection requirements, encourage the World Bank to reject loans to China unless the nation participates in multilateral debt relief initiatives and moves to limit the impacts of climate change, and cracks down on trafficking of wildlife and related products.
The new America COMPETES Act incorporates pandemic-focused priorities, including the text of the COVID-19 Emergency Medical Supplies Enhancement Act (H.R. 3125) from Rep. Juan Vargas (D-CA), which would update the Defense Production Act (DPA) to speed federal procurement of medical supplies and allow disclosure of major transactions. The bill also incorporates the Securing America’s Vaccines for Emergencies Act (SAVE Act, H.R. 3146), which clarifies the President may invoke the DPA to secure the domestic supply chain of vaccines. These bills were both originally passed by the House in the FY 2022 National Defense Authorization Act (NDAA), but later dropped from the final version of that law. The bill also sets aside $1.5 billion to drive U.S. manufacturing of critical medical supplies, and a further $10.5 billion to give to states to stockpile drugs and PPE. Other components of the bill increase transparency requirements for drugmakers to disclose where they manufacture critical medications.
The bill also includes immigration provisions, which may serve as a small peace offering to immigrants after Democrats had to drop larger immigration relief provisions from the still-pending Build Back Better Act late last year. The America COMPETES Act creates a “start-up” visa for entrepreneurs, essential employees, and family members for start-up businesses as well as removes “green card” caps for immigrants pursuing doctoral degrees in STEM fields. The bill also offers Temporary Protected Status (TPS) and a small number of immigrant visas for qualifying Hong Kong residents fleeing Chinese crackdowns on the island.
The America COMPETES Act also incorporates a baker’s dozen bipartisan bills from the House Science Committee. These bills fund U.S. research in federal agencies including a reauthorization of the National Science Foundation (NSF), funds new training and hires of scientists and researchers, and orders new research at the Department of Energy into climate change and microelectronics.
While the new America COMPETES Act enjoys momentum and bipartisan support, obstacles lie ahead. House Republicans already oppose the new bill, arguing Democrats left them out of the drafting process. Outside of partisan matters, the Senate-approved USICA did not touch on trade priorities, which are especially controversial within the business community and could fracture support for the larger bill. Similarly, the higher education lobby may have concerns about the America COMPETES Act’s new transparency rules regarding foreign gifts and investments in colleges. Elsewhere, Senate Commerce Ranking Member Roger Wicker (R-MS) previously expressed concerns about the bill’s prescriptiveness toward research agencies on subjects like climate change, while Sen. John Thune (R-SD) worried research dollars flow to elite institutions on the coast rather than rural institutions. And, of course, lawmakers will closely watch China and other foreign governments for reactions and possible retaliation in economic, immigration, and defense policy. We will have our first preview of Congress’ response to the new America COMPETES Act when the House Rules Committee meets to consider amendments to the bill next week.